Headnote

Arbitration – Validity of arbitration clause – Authority to agree to arbitration – Presumption of authority – DIAC arbitration rules

Summary of facts

The Petitioner had brought an action before the Dubai Court of First Instance to set aside an award issued under the DIAC arbitration rules in arbitration proceedings initiated by the Respondent, declaring that the arbitral tribunal had jurisdiction to hear the dispute.

The Petitioner had pleaded that the arbitral tribunal had no jurisdiction due to the nullity of the arbitration clause in the underlying contract. It argued that the person who signed the contract on the Petitioner’s behalf was not authorized to agree to arbitration. Moreover, it alleged that the claim related to the circulation of wealth and is not an arbitrable matter. The Dubai Court of First Instance dismissed the Petitioner’s action. The Petitioner appealed the decision before the Court of Appeal which upheld the lower court’s decision.

The Petitioner filed a petition to cassation.

Held

The petition to cassation was dismissed.

Where the name of a particular company appears in the preamble and body of a contract and a different person signs at the bottom of the contract, a presumption shall arise that the person who signed the contract did so in the name and on behalf of the company. In such case, the effects of the contract, in terms of rights and obligations, shall devolve directly upon the company because the person delegating authority acts through the delegated person.

An act under private signature is valid as a signed document provided that it bears the signatures, the seals, or the fingerprint of the parties.

Judgment

The Petitioner filed the petition to cassation arguing that it is a limited liability company and that its manager has the authority to bind the company to arbitration.

It argued that the Petitioner’s manager has neither signed the contract containing the arbitration clause nor delegated his authority to do so to someone else. The Petitioner filed the manager’s specimen signature to demonstrate that it was not the signature contained in the contract and that accordingly, the arbitration clause was void.

The Petitioner further argued that the fact that the Petitioner’s corporate seal is contained in the contract is irrelevant insofar as the signatory does not have the requisite authority to bind the company to arbitration. The Petitioner is under no obligation to state the name and capacity of the person signing the contract and it is the Respondent who has the legal burden of proving that a delegation of authority had been granted by the manager. The Court of Appeal did not address this argument, contenting itself with the fact that the contract bore the Petitioner’s corporate seal thereby denying its argument that the signatory to the contract did not have the authority to bind the company to arbitration.

It is settled in the Court of Cassation that the manager of a limited liability company has full powers to manage the company and the legal capacity to make dispositions over the rights relating to its activities, including an agreement to arbitrate in contracts made between the limited liability company and third parties, unless the [Page145:] articles of association of the company restrict his authority by prohibiting him from making certain dispositions or by expressly prohibiting him from agreeing to arbitrate. The manager may delegate any or all of his powers unless prohibited by the articles of association. The other agent in such case is deemed to act for the company and his acts shall bind the company.

It is further settled in the Court of Cassation that where the name of a particular company appears in the preamble and body of a particular contract and a different person signs at the bottom of the contract, a presumption shall arise that the person who signed the contract did so in the name and on behalf of the company. In such case, the effects of the contract, in terms of rights and obligations, shall devolve directly upon the company because in such a case, the person delegating authority acts through the delegated person.

It is further settled that an act under private signature is valid as a signed document provided that it bears the signatures, the seals, or the fingerprint of the parties.

It is clear from the underlying English contract that it bears the Petitioner’s corporate seal and its representative’s signature. The contract is thus binding on the Petitioner and is presumed to have been duly signed by its representative in the absence of evidence to the contrary.